European REACH Regulation Poses Significant Issues for Manufacturers and Importers of Chemicals Into the European Union

Legal News Alert: International

After almost a decade of debate and controversy, the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH Regulation) has entered into force in Europe, and a new European Chemicals Agency (ECHA) has been created. The REACH Regulation has significant implications for companies manufacturing and/or exporting certain chemicals to the European Union. For example, since June 1, 2008, the obligation for a company to register each substance listed in REACH’s articles has existed. Thus, the REACH Regulation can require action even if the covered substances are not manufactured by a company but are included by a company in a product sold in the European Union.

RegistrationSince June 1, 2008, the REACH Regulation requires registration of each covered substance. Registration requires the submission of relevant and available information on intrinsic properties of substances and, when this is not available, the generation of such information, including testing. For substances manufactured or imported in quantities of 10 tons or more, a Chemical Safety Report (CSR) also must be submitted.

Each manufacturer, importer, or “Only Representative” is individually obliged to submit a registration for each of its substances. However, where a substance is manufactured or imported by more than one company, the REACH Regulation purports to require the submission of a joint registration, detailing the hazardous properties of the substance, its classification and labeling, and a testing proposal (if any).

Depending on the quantity and properties of the substance imported or manufactured, registration for pre-registered substances must be completed by December 2010 at the earliest or June 2018 at the latest. Notwithstanding these deadlines, any registrant will have to file a joint submission by the first deadline applying to any of the registrants for the same substance. In addition, all manufacturers and importers must notify ECHA of the classification and labeling of the substances they place on the market as from December 1, 2010, regardless of when the substance is to be registered. This means that even if a company only has to register by June 2018, some information will already have to be submitted by December 2010. Therefore, it is essential for companies to evaluate the implications of the REACH Regulation and to start preparing registration as soon as possible.

If a company failed to pre-register by the December 1, 2008 deadline, it must, according to the REACH Regulation, suspend its activities involving the substances concerned and register them immediately. The company can then only resume activities involving the covered substances three weeks after the submission date of the complete registration dossier. In this case, as well as for non-phase-in substances (new substances in general), a duty to inquire applies. Companies must contact ECHA to determine whether a registration has already been made for the same substance. ECHA is supposed to facilitate contact between these companies and other potential registrants in order to organize the data-sharing process.

Substance Information Exchange ForumA possible first step in the registration process is the formation of a so-called Substance Information Exchange Forum (SIEF). The main objective of a SIEF is to facilitate data sharing among registrants of the same substance in order to avoid duplication of testing and to agree on the classification and labeling of the substances concerned. In addition, the SIEF also can be used as a starting point for the mandatory joint submission of data. Subject to full applicable competition rules, companies in the SIEF are free to choose how they communicate and organize themselves.

Following the end of the pre-registration deadline, on December 1, 2008, ECHA published a list of all pre-registered substances. The most current list, published on March 27, 2009, contained approximately 143,000 substances that were pre-registered by 65,000 companies. This updated list will help companies find the correct SIEF for their substance. The list also will help verify whether certain Pre-SIEFs cover the same substance and, hence, whether they should merge. In ECHA’s opinion, the list contains many preparations and substances that did not require registration. Therefore, ECHA advises companies to verify what registrations they really need to make. In February 2009, ECHA published a document containing the key SIEF principles and clarification regarding the Pre-SIEFs.

As noted above, conduct undertaken pursuant to the REACH Regulation is subject to the full application of the European Community (EC) competition rules. This is particularly important as competition rules apply to data sharing. The REACH Regulation encourages the sharing of information between companies, particularly in the SIEFs, but also during pre-registration, pre-SIEFs, the inquiry, and in the context of joint registration. Companies have to make sure that their information exchanges do not go beyond what is required under REACH, in a manner that would be contrary to EC competition law. This includes avoiding the creation of cartels or any other illegal market-distorting activities while exchanging information. Companies must not exchange problematic information.

Substances of Very High Concern (SVHC)The REACH Regulation gives special attention to SVHC. These include substances that are:

Carcinogenic, Mutagenic, or toxic to Reproduction (CMR)

Persistent, Bioaccumulative, and Toxic (PBT) or very Persistent and very Bioaccumulative (vPvB) according to the criteria in Annex III of the REACH Regulation

Identified, on a case-by-case basis, from scientific evidence as causing probable serious effects to humans or the environment of an equivalent level of concern as those above

These substances may become subject to authorization before they are placed on the market or used. At this moment, there are not yet substances subject to authorization. As a first step, the European Commission and the Member States must identify SVHC on the basis of the criteria described above, draft a “Candidate List,” and prioritize the substances listed to determine which ones should be subject to authorization, which uses of those substances can be excluded from authorization, and the “sunset date” by when a substance can no longer be used without authorization. When agreed on by the European Commission, this information will be included in Annex XIV of the REACH Regulation.

The ECHA Member State Committee has unanimously agreed on the identification of a number of SVHCs. The Candidate List was published on October 28, 2008 and will be regularly updated. ECHA has already published a recommendation to the European Commission to prioritize seven substances out of the 15 that are on the Candidate List and include them in Annex XIV of the REACH Regulation. It proposes that applications for authorization should be submitted between 24 and 30 months after the proposed substances have been included in Annex XIV of the REACH Regulation, and that these substances cannot be used after 42 to 48 months after the inclusion date. In addition, ECHA proposes to include exemptions for certain uses of only one of the prioritized substances in accordance with the current Restrictions on Marketing and Use Directive (76/769/EEC).

Even though the manufacture or import into the European Union of such SVHC will only be subject to authorization when the substances are included in Annex XIV of the REACH Regulation, and when the sunset date has passed, companies may already have legal obligations resulting from the mere inclusion of substances on the Candidate List. Some of these obligations apply since October 2008 and may include a notification obligation and the obligation to provide a safety data sheet.

EnforcementThe European Union Member States are responsible for enforcing the REACH Regulation. They are required to maintain a system of official controls and inspections and to put in place effective, proportionate, and dissuasive penalties in national legislation. Additionally, in order to coordinate the enforcement of REACH, a Forum for Exchange of Information on Enforcement (Forum) was established under ECHA. The Forum will, among other things:

Coordinate harmonized enforcement projects and joint inspections

Develop working methods and tools for inspectors

Identify enforcement strategies

Liaise with industry

Develop an electronic information exchange procedure

The first coordinated enforcement project has already started with national inspectors checking whether companies have correctly pre-registered phased-in substances.

Currently, most Member States have already established the sanctions and penalties for infringements in their national legislations, and those that have not are in the process of doing so. As a general rule, most Member States have added REACH to their existing environmental legislation, using already-existing authorities and deriving the penalties from that legislation.

ConclusionThe REACH Regulation poses many fundamental challenges in the way chemical substances can be marketed in the European Union. It is essential that companies review the possible implications, potential burdens, and risks of the REACH Regulation discussed in this alert.